1 Answer
1

it first flips the image upside down so it's all in the depth, then tries to scale the 0pt height to 3in....

The first release didn't have a totalheight key, I added one pretty quickly:-)

You are probably correct that the external images in general don't naturally have a depth but the package doesn't assume that: if there was an image format with a natural baseline specification as well as total size, a graphicx driver could import that into latex with natural height and depth.